ValueAct Reveals Activist LKQ Stake, Sells Some Arcosa ~ market folly

Monday, September 16, 2019

ValueAct Reveals Activist LKQ Stake, Sells Some Arcosa

Jeff Ubben's activist investment firm ValueAct Capital has filed a couple of 13D's with the SEC recently.

ValueAct Reveals Activist LKQ Stake

First, per a 13D regarding shares of LKQ Corp (LKQ), ValueAct now owns 5.2% of LKQ with over 16.03 million shares as of September 3rd.  This is a brand new position for the firm.

The filing indicates they were out buying shares throughout August and into early September with weighted average purchase prices coming between $24.91 and $27.49. 

The 13D also includes this note regarding their stake: "The Reporting Persons have had and anticipate having further discussions with officers and directors of the Issuer in connection with the Reporting Persons' investment in the Issuer. The topics of these conversations have covered or will cover a range of issues, including those relating to the business of the Issuer, management, board composition (which include whether it makes sense for a ValueAct Capital employee to be on the Issuer's board of directors), investor communications, operations, capital allocation, dividend policy, financial condition, mergers and acquisitions strategy, overall business strategy, executive compensation, and corporate governance."

Per Google Finance, LKQ "distributes replacement parts, components, and systems used in the repair and maintenance of vehicles. It operates in three segments: North America, Europe, and Specialty. The company distributes bumper covers, automotive body panels, and lights, as well as automotive glass products, such as windshields; salvage products, including mechanical and collision parts comprising engines; transmissions; door assemblies; sheet metal products, such as trunk lids, fenders, and hoods; lights and bumper assemblies; scrap metal and other materials to metals recyclers; and brake pads, discs and sensors, clutches, steering and suspension products, filters, and oil and automotive fluids, as well as electrical products, including spark plugs and batteries."

ValueAct Sells Some Arcosa Shares

Second, in a separately amended 13D, ValueAct has disclosed it has sold some Arcosa (ACA).  Per the 13D, the fund sold shares on September 9th through 13th at weighted average prices of around $34.50.

After the sales, ValueAct still owns 5% of the company with over 2.41 million shares.

Per Yahoo Finance, Arcosa "manufactures and sells infrastructure-related products and services for the construction, energy, and transportation markets. It operates through three segments: Construction Products Group, Energy Equipment Group, and Transportation Products Group. The Construction Products Group segment offers lightweight and natural construction aggregates, and trench shields and shoring products that are used in construction landscape, including commercial, industrial, road and bridge, and underground construction. It serves concrete producers; commercial, residential, industrial, and highway contractors; manufacturers of masonry products; state and local governments; and equipment rental dealers. The Energy Equipment Group segment provides structural wind towers for wind turbine producers; steel utility structures for electricity transmission and distribution; and pressurized and non-pressurized storage and distribution containers that store and transport various products, such as propane, anhydrous ammonia, and natural gas liquids. The Transportation Products Group segment offers hopper barges, tank barges, fiberglass covers, hatches, castings, and winches for commercial marine transportation companies and industrial shippers; axles, circular forgings, and coupling devices for freight, tank, locomotive, and passenger rail transportation equipment, as well as for other industrial uses; and cast components for use in the industrial and mining sectors. The company is headquartered in Dallas, Texas."

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